CESTAT Kolkata Says Customs Cannot Extend Findings From Two Tested Mica Consignments To 72 Earlier Imports

The Kolkata Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has partly allowed an appeal by M.P. Mica Enterprises Private Limited, holding that customs authorities could not apply laboratory findings from two live consignments of imported mica to 72 past consignments without independent evidence that the earlier imports were identical.

A bench of Judicial Member Ashok Jindal and Technical Member K. Anpazhakan, however, upheld the reclassification of the two live consignments under Customs Tariff Heading 6814 and the consequential differential duty demand.

“Accordingly, we hold that the Test Reports obtained in respect of the two live consignments cannot be made applicable to the goods cleared under the past 72 consignments. Thus, we hold that the demand of differential Customs duty confirmed in respect of the past consignments, including the two provisionally assessed consignments, on the basis of the Test Reports received for the two live consignments, is legally not sustainable and hence we set aside the same.”, the tribunal ruled.

The dispute arose after the importer declared the goods as “Crude Mica Rifted into Sheets” in Bills of Entry filed before Kolkata Customs, describing them as crude mica and mica rifted into sheets for customs assessment. Acting on intelligence that the goods were actually processed mica sheets of regular shapes and sizes with plain edges, customs authorities drew samples from two consignments and sent them to the Central Revenue Control Laboratory (CRCL), Kolkata.

The CRCL reports stated that “Each of the two samples appears to be processed,” while one report also recorded that the samples were mixed with polymers/additives.

Based on these findings, the department reclassified the goods, raised differential duty demands on the live consignments as well as past imports, and imposed confiscation, redemption fines, and penalties.

Before the tribunal, the importer argued that the goods fell within the tariff entry covering crude mica and mica rifted into sheets, and that the department had failed to establish that the imports were further worked so as to qualify for classification under the heading applicable to worked mica.

It also argued that the dispute was one of classification and could not justify allegations of suppression or misdeclaration.

After examining the tariff entries, HSN explanatory notes, physical examination reports and statements recorded during investigation, the Tribunal upheld the department's classification of the two live consignments.

“The CRCL Test Report supports the findings that the goods imported under the two live consignments are Processed Mica, classifiable under the CTH 6814.” it noted.

The bench noted that the imported goods had regular shapes, plain edges, and characteristics of processed mica, and also relied on the importer's own statement that the mica underwent mechanical processing to obtain the required shapes and sizes.

While considering the department's invocation of the extended limitation period, the Tribunal held that the dispute was purely one of tariff classification and not one involving suppression or wilful misstatement, noting that the importer had disclosed full particulars in the Bills of Entry and the assessments had been finalized after customs scrutiny.

“We observe that the dispute in this case is whether the said goods fall under CTH 2525 or 6814. Needless to say, a mere difference of opinion on classification cannot be equated with misdeclaration. In a classification dispute, mis-declaration cannot be alleged.”

Consequently, the tribunal set aside confiscation of the goods, the redemption fine, and all penalties imposed on the importer.

For Appellant: Advocates S.K. Mohapatra and Shri Arijit Goswami,

For Respondent: Subrata Debnath, Authorized Representative